Financial planning strategies for the new year

Many of us are embarking on this New Year with a list of resolutions. Lose ten pounds. Work out 30 minutes a day. Eat healthier. Spend more time with the kids. Focus on special time with the significant other. These are all great goals.

But having a solid plan for your fiscal future is one of the most important resolutions you can undertake. Unfortunately, too many of us are light years away from creating a sound financial strategy.

Now that we’re embarking on 2017, it’s time to start thinking about a new plan for your monetary goals. If you’re already following a good financial strategy, keep at it, but don’t forget. It’s a never-ending process that requires review and renewal at least every year.

If you’re like most Americans, you’re spending too much and saving too little. In fact, many don’t even know where their money is going, except out of their pockets. Take the time to give yourself a financial checkup. Even if you’re doing well financially, you should take a look at your savings, what you’re spending and your financial plans to see what can be improved.

Where are you?
Assess where you are in life and the financial tools you should consider having in place. Life insurance, disability insurance, health insurance and a college fund for your kids should probably be in the mix. What do your debts look like? Are you covering your expenses with your income? Are investments tailored for profits for today’s markets or is your plan based on advice from ten years ago? All of these questions should be considered by you and your significant other as you plan. When you have all of the data, work with your spouse to develop a reasonable family budget that you can follow. Make sure you both are on board and support your new financial strategy.

Watch how you spend your money.
Tally your expenses to keep an eye on where your money goes. Some areas to watch with a wary eye include several recognizable budget busters. Americans say they blow their plans on dining out (24 percent), food and groceries (19 percent), entertainment (15 percent) and consumer goods (15 percent).

Save and save some more.
First and foremost, you should max out your 401(k) contributions. Many employers match a percentage of your savings, so at least start there. The self-employed should contribute as much as they can toward retirement by investing in IRAs and SEPs. If you’re 50 or older, you can add even more dollars as catch-up funds. If you just can’t afford to max out, increase your savings by a specific percent every year until you can.

A 2015 financial survey showed 62 percent of Americans have a mere $1,000 in savings. While you’re saving for the future, save for the unknown with a liquid savings fund. This should equal about six months of income and sit in an interest-bearing savings or money market account. These dollars can help you cover foreseen or unforeseen expenses that may come up and tide you over in case of a job loss, maternity leave or a medical or other emergency. Develop a plan to contribute a regular amount each month until you hit that number. Also, consider setting up savings segments to cover major expenses that are expected, such as a new car, insurance, vacations, home renovations and more. Have specific dollars set aside each month to cover these as they come due.

To make it easier to save, automate the process. Set up direct deposits into particular accounts that you’ve created at your financial institution to match your plan. You can time them to hit when your paycheck is deposited.

Pay down those heavy hitters.
To help you focus on savings, start by paying down your credit cards. Some start by paying off the card with the highest interest charges. You could also focus on the one with the lowest amount and pay it off, which gives a feeling of success. Normally, it’s best to focus on paying off credit cards as compared to your mortgage or student loans because they usually carry a higher interest rate.

Get the family involved.
You’re never too old or too young to gain an understanding of good fiscal habits. Get your kids involved with money management. Trips to the grocery store allow you to show them the value of a dollar and how to make smart choices by comparison shopping. Teach them how to manage their money on their own and how to avoid money pitfalls.

Getting your finances in order doesn’t have to be a difficult challenge if you have a clear picture of where you are in life and where you want to be. Guiding you should be a solid plan stacked with achievable objectives to get you focused on a successful financial future.■

Sources: fidelity.com, gobankingrates.com, usnews.com and the author’s personal experience.